Home or away

New UK legislation introduced to catch terrorists has caught three British bankers accused of Enron-related fraud who are now fighting extradition. By Jon Robins


It is a somewhat unconventional strategy for defence lawyers to exhort UK prosecuting authorities to investigate the alleged criminal conduct of their own clients. Nonetheless, that is what is happening in the current extradition battle that is being played at Bow Street Magistrates, where the three British former NatWest bankers, Gary Mulgrew, Giles Darby and David Bermingham, stand accused of defrauding their old employer. The trio are fighting off requests from US prosecutors to face trial in Houston, Texas, where they are charged with seven counts of ‘wire fraud’, or illegally acquiring money via international banking systems.

“We’ve been writing to the Serious Fraud Office, the Financial Services Authority and the Crown Prosecution Service, but nobody wants to do anything about it,” complains Mark Spragg, a partner at Jeffrey Green Russell, which is representing all three bankers. “Their approach is: ‘We’ll let the US do it’,” he says. “But the principal fact is that they’re accused of defrauding NatWest, which is in England, and they should be investigated and, if necessary, tried in the UK.”

The trio, who deny the charges, were managing directors of Greenwich NatWest when they were alleged to have carried out the fraud. The US Department of Justice claims they persuaded NatWest to sell its interest in a company named LJM Swap Sub for less than it was worth. They are then said to have pocketed £1.28m each and made $12m (£6.7m) for two executives at Enron. The Enron executives admitted their role as part of a plea bargain.

Not only is there an apparent unwillingness on the part of the UK authorities to take an interest, but the alleged victim has subsequently lent the defendants more money. Mulgrew has received £720,000 personally and the trio borrowed a further £1.3m in business loans. All of this does little to ease the anxieties of Spragg’s clients, who deny the charges. “I think if we get taken to Texas our lives are screwed,” says Mulgrew. “I don’t think we can get a fair hearing.”

Spragg says: “The irony is that they could be better off pleading guilty in England rather than going to the US, fighting and winning, where they would just lose all their money and be put in prison for two years [before any trial takes place].”

The men face a maximum sentence of 35 years, there is no legal aid in Texas, and the estimated legal costs are around $1.5m (£840,000) for each defendant, which they would not recover even if they were successful. They also face up to two years in a high-security federal penitentiary prior to any trial, as there is no chance of bail as they would automatically be regarded as a “flight risk”.

Last month’s three-day hearing was the first case under Part Two of the Extradition Act, principally introduced to ensnare terrorists, which came into force this January. The judge is due to announce his decision this Friday (15 October).

Civil rights group Liberty has been following the case and will formally intervene if that decision is appealed. Gareth Crossman, Liberty’s policy director, explained that there used to be a residual role for the Home Secretary to intervene in extradition proceedings prior to the new act. This introduced new fast-track extradition proceedings between EU countries, which have broadly similar criminal procedures and safeguards in place. However, a supplementary agreement was struck between the US and UK, which, according to Crossman, “basically means that the fast-track process will apply from the UK to the US but, interestingly enough, not from the US to the UK”.

So what is Liberty’s objection to the current application? “All the relevant facts arise from events that took place in the UK and the matter should be dealt with here,” says Crossman. In fact, Mark Spragg believes that “95 per cent of the alleged conduct” occurred in England.

Extradition would inevitably involve a breach of the European Convention on Human Rights, in particular Article 8, which sets out a right to respect for an individual’s family and private life. Each case requires a consideration of proportionality and a balance has to be struck between breach of that right and any justification. “The Article 8 right places an obligation upon the UK authorities that, if they aren’t willing to prosecute, then the burden is on them to say why not,” says Crossman. “If they just want to leave it to the Americans, that’s not good enough.”

Jason Mansell, a white collar law specialist at 7 Bedford Row and a former Crown Prosecution Service prosecutor who spent four years in its extradition unit, believes there might well be a crime worthy of prosecution in the UK, “but if one reads the act, that actually isn’t of any importance. To me, though, it is [the defence’s] strongest point,” he says. “It’s really difficult to see which way the courts will jump.”

Mansell says that where countries are pursuing citizens who could be tried equally in their own states, there seems to be a “greater nexus” between offence and home country. “If I was a defendant I’d feel rather aggrieved that the UK authorities seem to pay no attention and the victim seems quite happy to carry on a banking relationship,” he adds.

Spragg fears that should his client be extradited, there would be little chance of a fair trial because of the heat of the Enron scandal. His clients’ defence expert Douglas McNabb, a federal criminal defence attorney, painted a grim picture of Texas justice in Bow Street Magistrates’ Court this month. He also said that the US federal justice system was “incredibly unfair” and that 97 per cent of people plead guilty to federal offences. “In most cases they would be mad not to after looking at the sentencing guidelines,” he added.

Spragg says: “There is a huge amount of anti-Enron sentiment in Houston. It was their biggest employer and a major contributor to their economy. The people of Houston just want to shut the gate on it.” But hopefully, that will not be with his clients behind it.